The major difference between the Keynesian approach and the monetarist approach is that   a. there are no differences.   b. Keynesian analysis explains an equilibrium condition and monetarism does not.   c. monetarism explains an equilibrium condition and Keynesian analysis does not.   d. in Keynesian analysis, money affects the economy by first affecting interest rates; monetarist analysis is not limited to working through interest rates.

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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QUESTION 1

The major difference between the Keynesian approach and the monetarist approach is that

  a.

there are no differences.

  b.

Keynesian analysis explains an equilibrium condition and monetarism does not.

  c.

monetarism explains an equilibrium condition and Keynesian analysis does not.

  d.

in Keynesian analysis, money affects the economy by first affecting interest rates; monetarist analysis is not limited to working through interest rates.

 

QUESTION 2

When comparing the Keynesian and monetarist approaches, the only substantive difference is that

  a.

Keynesians approach aggregate demand by multiplying the money supply by velocity, while monetarists use the equilibrium conditions of the expenditure schedule.

  b.

Keynesian analysis suggests that money affects consumption first while monetarist analysis suggests that money affects investment spending first.

  c.

the Keynesian equation leads to a prediction of real GDP; the monetarist equation leads to a prediction of nominal GDP.

  d.

Keynesians concentrate on aggregate demand and monetarists concentrate on aggregate supply.

 

QUESTION 3

President George W. Bush's tax cut in 2001 was a rare example of

  a.

timely fiscal policy.

  b.

the inability of Congress to react to policy needs.

  c.

timely monetary policy.

  d.

the slow response of policy to events.

 

QUESTION 3

President George W. Bush's tax cut in 2001 was a rare example of

  a.

timely fiscal policy.

  b.

the inability of Congress to react to policy needs.

  c.

timely monetary policy.

  d.

the slow response of policy to events.

 

QUESTION 5

Monetarists have received this label because they emphasize the role of

  a.

the money supply in determining nominal GDP.

  b.

money supply in determining aggregate supply.

  c.

the Fed in making monetary policy.

  d.

the money supply in determining interest rates and investment.

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